What happens to my pension if I keep working?

Three countries, three answers

Retiring used to mean stopping. It increasingly does not, and the three systems in this library disagree sharply about what that should cost you.

New Zealand

• No income test
• No asset test

Your wage changes your tax code, and nothing else. The payment itself is untouched.

Australia

• $300 a fortnight ignored
• A balance up to $11,800

The Work Bonus is applied first. Anything left over goes into the income test.

United States

• $1 withheld for every $2
• Over $24,480, in 2026

Only before full retirement age, and what was withheld is credited back afterwards.

New Zealand: nothing happens

New Zealand Superannuation is not income tested and not asset tested. Work and Income says both halves of that in one line: "It doesn't depend on your income or your assets", and "You can work while you get NZ Super."

There is no threshold to stay under, no taper, and no form to fill in about it. A person on a full salary at 66 receives exactly the same New Zealand Superannuation as a person with no income at all.

The one real consequence is tax, and it is easy to get wrong. Work and Income notes that earning income can change your tax code, which changes what is deducted from the New Zealand Superannuation payment itself. Nothing is being taken away from you. The payment is simply being taxed at a rate that reflects your total income rather than being taxed as though it were your only income.

The other footnote: while New Zealand Superannuation is not income tested, other payments are. Work and Income points out that "any income you do earn can affect other payments you get from us, e.g. Accommodation Supplement."

Australia: the Work Bonus, which quietly builds up

Australia does test income, so employment income counts. The Work Bonus exists to take the edge off that, and the way it accumulates is the part most people do not know about.

Services Australia describes it as a scheme "that helps reduce the amount of your employment income that counts towards the income test for your pension".

Two mechanics matter.

A fortnightly credit. "You'll have $300 credit added to your Work Bonus balance each fortnight. The maximum Work Bonus balance you can accrue is $11,800 credit."

It applies before the income test. "If you work, we'll apply your Work Bonus balance to offset your Work Bonus eligible income. We'll do this before we apply the income test. If there is income left over after applying your Work Bonus balance, it will be included in your income test."

Now the part that rewards knowing about it. The credit builds whether or not you work: "If you don't work, you'll have $300 credit added to your Work Bonus balance each fortnight until it reaches the maximum of $11,800 credit."

So someone who has been retired a while and takes on a piece of seasonal work can arrive with a balance of up to $11,800 already banked, and the first $11,800 of employment income is simply not seen by the income test. There is no application: "You don't need to apply for the Work Bonus. We'll apply it to your eligible income if you meet all the eligibility rules. All you need to do is declare your income."

Whatever is left after the Work Bonus meets the ordinary income test, which for a single pensioner reduces the payment by 50 cents for each dollar over $226 a fortnight.

Two limits on it. The Work Bonus applies to employment and self-employment income, not to investment income. And a transitional rate pensioner is not eligible for it.

The United States: withheld, not lost

The American rule reads like a penalty and mostly is not one, which is the single most misunderstood thing about it.

Before full retirement age, "we deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2026, that limit is $24,480."

In the year you reach full retirement age the rule loosens: "we deduct $1 in benefits for every $3 you earn above a different limit. In 2026, this limit on your earnings is $65,160", counting only earnings "up to the month before you reach your full retirement age".

And then it stops entirely. "Beginning with the month you reach that age, your earnings no longer reduce your benefits, no matter how much you earn."

Here is the part that changes how the whole thing should be read:

We will recalculate your benefit amount to give you credit for the months we reduced or withheld benefits due to your excess earnings.

The withheld money is not confiscated. At full retirement age the benefit is recalculated as though you had claimed later, and the months that were withheld are credited back into the ongoing payment. Over a normal lifespan, much of what was withheld returns.

There is a second effect in the same direction. The Administration reviews earnings each year, and "if your latest year of earnings is one of your highest years of earnings, we recalculate your benefit and pay you any increase you are due". Because the benefit is built on an average of your best 35 years, working later in life can displace a low year from the average and raise the payment permanently.

There is also a special rule for the first year, which lets a full benefit be paid "for any whole month we consider you retired, regardless of your yearly earnings", so someone who stops work mid-year is not caught by a whole year's earnings.

And a warning the Administration attaches to all of it: different rules apply to someone under full retirement age working outside the United States, which matters to anyone reading this from New Zealand or Australia.

What this guide does not tell you

It does not cover what working does to a private retirement account, which is a separate question about contribution limits and access ages rather than about pensions.

It does not cover the tax on your combined income in any of the three countries, only what happens to the pension itself.

It does not cover someone drawing a pension from one country while working in another, where both sets of rules can be in play at once.

And it does not cover Australian pensioners on the transitional rate, or the Disability Support Pension and Carer Payment, which have Work Bonus rules of their own on top of their normal work rules.